One of the untold problems that the current medical insurance system is causing has to do with medical insurance fraud. Some experts estimate that medical insurance fraud adds up to as much as $100 billion each year. In fact, the health care industry has been called a “gold mine” for fraudsters by some folks. In fact, identity theft related to health care dominated crime in 2009, at least according to some advocacy groups.

There are a number of ways that someone can commit medical insurance fraud. One of the most common ways that medical insurance fraud occurs is when someone that has legitimate access to a patient’s records, such as a hospital staffer or a physician’s assistant, leaks private information to a buyer, often who is a member of a criminal syndicate.

How does this work, exactly? Well, the Medicare system alone is worth around $450 billion each year, with 44 million beneficiaries. This makes the U.S. Federal Government one of the biggest targets, and one of the biggest victims, of medical insurance fraud.

Once the fraudulent syndicate gets a hold of medical insurance information and identifying information like a Social Security number, they then bill Medicare or another medical insurance provider under false pretenses. They charge, and are paid for, procedures, medications or treatments that have never actually been prescribed.

Someone, for example, might order a wheelchair for a person that doesn’t need it. They’ll bill Medicare, take the money and provide no wheelchair. Home health care in an area that especially falls victim to this kind of fraud, as these criminals will bill the insurance company for home health care visits that never occur.

Another type of fraud involves tampering with sensitive and personal medical history and information. For example, your records might be changed to reflect an allergy to penicillin, followed by a purchase of an Epi Pen. The Epi Pen is never purchased, of course, and the criminals pocket the money.

You might need treatment, however, and not be able to receive penicillin because of this fraudulent entry in your health records.

The same goes for things like eye glasses. An insurance company will usually pay for glasses once every two years, meaning that you could need new glasses and have to go without because fraudsters cheated your insurance company.

Whatever medical insurance solutions Washington comes up with, the issue of medical fraud isn’t likely to be solved any time soon.

Photo via Domingouceda